Dollar Index (DXZ8):
The DX opened lower at 87.37 and retraced to a morning Lo of 86.37 after the Oct. CPI fell 1.0%, the largest drop in 16 years. A drop of 4.5% in Housing Starts along with 12,000 fewer building permits added to the mix, before comments from Fed Reserve Vice-Chairman Donald Kohn said the central bank is engaged in quantitative easing, where money supply is used along with interest rate cuts to supply funds to the market. Prices rebounded to a mid-day Hi of 87.77 as flight-to-quality became more attractive as equity markets retraced. The DX followed Treasuries higher into the daily close of 87.58, down 17 tics. The s/t trend remains 'positive' w/firm momentum indicators. Flight to quality and further rate cut proposals by major foreign central banks supported the DX after an early set-back. Traders will key on Thursday's report on Jobless Claims and Leading Economic Indicators for direction. A higher open should find Resistance at 88.19 and 88.81, while an open below 87.28 may find Support at 86.67 and 85.76.
British Pound (BPZ8):
The BP opened higher at 1.5027 on DX weakness and rose to a morning Hi of 1.5244, after weaker U.S. economic data. Prices reversed and tested our initial Resistance level of 1.5026 as we head into the afternoon session. DX strength sent prices lower into the close to end the session at 1.5018, up 116 tics. Comments by BoE Deputy Governor for Financial Stability John Gieve, stating the U.K. is just entering a recession and more rate cuts may be necessary, weighed on prices. The s/t trend remains 'negative' w/ weak momentum indicators. Longs need to tighten 'stops' or buy 'puts' to reduce exposure. A lower open may find Support at 1.4860 and 1.4702, while an open above 1.5052 should find Resistance at 1.5210 and 1.5402.
Canadian Dollar (CDZ8):
The CD opened lower at .8076 and rose to a morning Hi of .8136 as the DX retraced on weak economic data. As the DX rebounded, the CD followed oil/metals prices lower, along with other major foreign currencies to a close of .8009, down 68 tics. The s/t trend remains 'negative' w/weak momentum indicators. A lower open may find Support at .7950 and .7891, while an open above .8043 should find Resistance at .8102 and .8195.
Euro Currency (ECZ8):
The EC opened higher at 1.2618 and rose to a morning Hi of 1.2800 on the weak U.S. economic data. As equity markets headed lower, flight to quality in the DX sent the EC lower through to the close of 1.2588, up 25 tics on the day. The s/t trend remains 'negative' w/weak momentum idicators. A lower open may find Support at 1.2473 and 1.2357, while an open above 1.2636 should find Resistance at 1.2752 and 1.2915.
Japanese Yen (JYZ8):
The JY opened lower at 1.0355 and slid to a morning Lo of 1.0304, before rebounding along with the DX throughout the session. Lower equity prices saw the flight to quality buying as traders unwound higher yield (higher risk) asset trades and covered short JY positions. Prices ended the session at 1.0379, up 2 tics. Continued weakness on the Nikkei 225 index would continue to support higher JY. A higher open should find Resistance at 1.0434 and 1.0489, while an open below 1.0369 may find Support at 1.0314 and 1.0249.
